Industry Overview - The Zacks Tobacco industry is shifting towards smoke-free alternatives due to increased consumer health awareness and stricter regulations on traditional cigarettes [1][4] - Major companies like Philip Morris International, Altria Group, and Turning Point Brands are investing in reduced-risk products (RRPs) to cater to the demand for healthier nicotine options [1][4] Market Trends - The popularity of smoke-free options, such as heated tobacco and vaping products, is reshaping the industry as consumers seek safer alternatives [4] - Tobacco companies are leveraging strong pricing power to maintain revenues despite declining cigarette sales, as loyal consumers tend to absorb price increases [2][5] Challenges - The industry faces challenges in cigarette sales volumes due to inflation and changing consumer behavior, alongside regulatory restrictions impacting sales and advertising [6] Industry Performance - The Zacks Tobacco industry ranks 65, placing it in the top 27% of over 250 Zacks industries, indicating positive near-term prospects [7][8] - The industry has outperformed the broader market, gaining 63.8% over the past year compared to the S&P 500's 9.8% increase [10] Valuation - The industry is currently trading at a forward P/E of 15.78X, lower than the S&P 500's 21.89X and the sector's 17.62X [13] Company Highlights - **Altria Group**: Focused on transitioning to a smoke-free future with its oral nicotine pouch brand, on!, and has seen a 29.3% increase in shares over the past year [15][17] - **Philip Morris International**: Leading in RRPs with products like IQOS and ZYN, shares have surged 81% in the past year [20][21] - **Turning Point Brands**: Gaining traction with innovative products and strong demand for smokeless alternatives, shares have skyrocketed 132.8% in the past year [24][25]

Key Takeaways MO's cigarette volumes dropped 13.7% in Q1 2025, with smokeable revenues down 5.8% to $4.62 billion. Economic strain and illicit e-vapor use hurt Marlboro's share and boosted discount brand gains. MO's smokeable struggles highlight the urgency to accelerate its shift toward smoke-free alternatives.Altria Group, Inc. (MO) is facing growing pressure in its core smokeable products segment, with recent data highlighting a sharp decline in cigarette volumes. In first-quarter 2025, domestic cigare ...